May 2004 Newsletter

Economics 837

By: Tony Petras, Vice President of EDI Services, Partner

All Payers Are Not Equal Under HIPAA

One of the common misconceptions surrounding the implementation of the HIPAA transaction and code sets is that every provider, clearinghouse, or vendor should be able to create an 837 claim file and have it processed by any payer, TPA, or clearinghouse.

Since last October, Quadax has received inquiries from clients, payers, TPAs, clearinghouses, and Union Locals seeking claims in an 837 format. However, when we ask these entities for details such as companion guides, file transfer protocols, functional acknowledgments, and/or claim status reporting, we are oftentimes greeted with bewilderment.

Responsibility for the audit and control of claims received and sent from providers to payers makes it critical that these details be understood and implemented ahead of time. Our clients must be allotted a certain level of comfort that the claim they processed through Xpeditor was free of errors, was sent to and received by Quadax, and was successfully forwarded and confirmed as either payable or rejected by the final entity.

Economics plays a major role in the decision to add a new transmission to our processes. The business model used by Quadax is to charge providers a fee for transferring valid claims to payers. From those revenues, Quadax is able to employ software developers, service personnel, and support staff.

At present, Quadax supports the direct submission of hospital/technical claims to 50 individual payers and medical/professional claims to another 100 payers on a daily and weekly basis.

As the number of payers supported increases, so too does the cost of doing business. Additional personnel and systems are required, as is the amount of attention to detail necessary to verify and conclude the success of these transfers, not to mention training and troubleshooting efforts to keep clients apprised of the nuances of these new "claim types".

A recent investigation concluded that nearly 82% of the claims Quadax transmits are HIPAA compliant, and of those, 78% are formatted as ANSI 837 4010A1. The differences are comprised of Worker's Compensation claims (which are not regulated by HIPAA) and claims routed through other clearinghouses, which fall under a category covered by 'Business Associate Agreements'.

To keep costs low, and to provide an even greater availability of electronic claims, Quadax has chosen to partner with WebMD, the nation's largest clearinghouse, so that claims can be routed to a number of smaller enterprises. Although Quadax is fully capable of creating and transferring claims in the HIPAA-mandated ANSI format, working with WebMD provides economies of scale that would otherwise limit the ability of our clients to submit claims in an electronic format to hundreds of other payers.

When you, as a client, are contacted by a payer that now desires electronic claims, you should inquire if they can accept claims through WebMD. If the answer you receive is no, suggest that that would be the most economical method for you to employ, since your clearinghouse, Quadax, maintains a business associate agreement with WebMD.

If the payer is not interested in contracting with WebMD, but instead desires to have Quadax route the claims to them directly, you should be aware that developing and maintaining the details described above, may result in increased costs, either to you directly as a client of Quadax, or to the payer desiring to have these claims submitted electronically.